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Why fuboTV Stock Jumped on Wednesday

By John Ballard – Aug 11, 2021 at 11:44AM

Key Points

  • fuboTV is seeing improving profitability as subscribers flock to its sports offering.
  • The company's recent results demonstrate a strong competitive position in a crowded streaming market.

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The streaming platform delivered a terrific second quarter amid increasing competition.

What happened

fuboTV (FUBO 5.28%) surprised investors with better-than-expected revenue in the second quarter. The company also raised its full-year outlook for revenue, which is now expected in the range of $560 million to $570 million, representing a 110% increase over 2020 and above analysts' previous expectations. 

"Within the quarter we made meaningful advancement toward our long-term growth and margin targets, while also capitalizing on the favorable trends we are seeing in the category," the company said in its Q2 shareholder letter. 

The stock was up 9.3% at 10:11 a.m. EDT on Wednesday. It has been one of the better-performing streaming stocks over the last year.

FUBO Chart

FUBO data by YCharts

So what

A heavy dose of sports broadcasting during the quarter caused a 138% spike in subscribers, reaching 681,721 to end the quarter. That translated to revenue growth of 196%, boosted by stellar advertising gains of 281% year over year.

Most importantly, fuboTV saw advertising monthly average revenue per user increase by 62% over the year-ago quarter. This benefited profitability. Although the company reported a net loss of $43 million, it was well ahead of the consensus analyst estimate that called for a $67 million net loss. 

"This positions us well to continue making deliberate, strategic investments in team, technology and infrastructure to optimize our market position and grow share, while also driving margin expansion," the shareholder letter stated. 

A family watching TV at home.

Image source: Getty Images.

Now what

The spike in the stock may have as much to do with the perception of fuboTV's competitive position in the marketplace as its actual results. "Our second quarter results showcase the continued momentum in our business, with consumers choosing fuboTV over more expensive legacy pay TV services due to our innovative product experience and customer-friendly approach at an affordable price," the company said. 

It's because of these trends that management feels confident that it can achieve its higher outlook for the year. Guidance for subscribers now calls for 910,000 to 920,000, or an increase of 67% at the midpoint over 2020. 

fuboTV could also be benefiting from subscription fatigue, as a result of so many streaming services available now. All said, this is a sleeper streaming service stock to keep on your radar.

John Ballard has no position in any of the stocks mentioned. The Motley Fool recommends fuboTV, Inc. The Motley Fool has a disclosure policy.

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